Launch of Additional Plans under existing schemes

GENERAL MANAGER
MUTUAL FUNDS DEPARTMENT

All Mutual Funds registered with SEBI/
Unit Trust of India
 

Dear Sirs,

Re : Launch of Additional Plans under existing schemes

Some of the mutual funds have launched additional plans of different maturity periods as a part of the existing schemes. This matter was discussed in the last meeting of the advisory committee on mutual funds. The committee recommended that the additional plans being launched under the existing schemes (e.g. gilt schemes, liquid/money market schemes/debt schemes or any other type of schemes) which have substantially different characteristics from the main scheme shall not be launched as part of an on-going open ended scheme and should be launched as separate schemes.

The matter has been examined further and it has been decided that any ongoing open ended scheme proposing to launch additional plans, other than dividend and growth plans, which differ from the main scheme in terms of portfolio, maturity or any other characteristics, shall launch them as separate schemes in accordance with the detailed guidelines given below:

1. These plans/schemes may be launched as a part of existing offer document by issuing an addendum or by issuing a separate offer document. However, each plan shall follow all disclosure requirements and other norms as specified under SEBI (Mutual Funds) Regulations, 1996.
2. The proposal for launch of such additional plans shall be approved by the boards of AMCs and the trustees. The addendum/offer document detailing the features of the plan shall be submitted to SEBI at least 21 days prior to the opening of the first plan (if there are more than one plans). The addendum and application forms of such plans shall be made available by the mutual funds on their websites. The schedule detailing the dates of the subsequent plans to be launched in the future shall be disclosed in the addendum. The AMC shall publish an advertisement or alternatively issue a press release at the time of launch of such plans. The boards of AMCs and Trustees shall also review its compliance periodically and ensure that the additional plans/schemes are not being launched for a particular investor on any arbitrary date but these should be open for subscription for all the investors.
3. The minimum amount the AMC intends to raise under each plan shall be clearly stated in the addendum/offer document so that there is no scope of complaints by the investors that their applications were not accepted by the mutual fund.
4. The salient features and associated risk factors of such plans, entry/exit loads applicable shall be clearly mentioned in the offer documents.
5. The investment restrictions as specified in SEBI Regulations shall apply separately to each of the plans. All periodic disclosure including portfolio statement to be mailed to the unitholders as per the existing regulations shall be applicable to each of the plans. At the end of each plan, portfolio at the time of maturity and prevailing NAV shall be informed to the unitholders.

The above guidelines shall apply to all the additional plans that have been launched in the past and the plans/schemes to be launched in the future as a part of existing schemes, unless the AMC obtains a confirmation from SEBI that the additional plans do not have substantially different characteristics from the existing schemes. In case of all such plans/schemes that are already in existence, the addenda/offer document shall be filed with SEBI within 10 days.

These guidelines are issued in accordance with the provisions of Regulation 77 of the SEBI (Mutual Funds) Regulations, 1996. AMC boards and trustees shall monitor the compliance of the guidelines.

Yours faithfully,
 
 

P.K. Nagpal